Enviri Corporation

Good morning, everyone. My name is Jamie, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Envire Corporation third quarter release conference call. All lines have been placed on mute to avoid any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number 1 on your telephone keypad, If you would like to withdraw your questions, you may press star and 2. Also, this telephone conference presentation and accompanying webcast made on behalf of Envira Corporation are subject to copyright by Envira Corporation and all rights are reserved. No recordings or redistributions of this telephone conference by any other party are permitted without the express written consent of Envira Corporation. Your participation indicates your agreement. I would now like to turn the conference call over to Dave Martin of Envira Corporation. Mr. Martin, you may begin your call.

Thank you, Jamie, and welcome to everyone joining us today. With me is Nick Rasberger, our Chairman and Chief Executive Officer, and Tom Batikas, our Senior Vice President and Chief Financial Officer. On the call, we will discuss our results for the third quarter and our outlook for the remainder of the year. We'll then take your questions. Our quarterly earnings release and slide presentation for this call are available on our website. During today's call, we will make statements that are considered forward-looking within the meaning of the federal securities laws. These statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties that may cause actual results to differ materially from those forward-looking statements. For a discussion of such risks and uncertainties, see the risk factors section in the most recent 10-K and as updated in subsequent 10Qs. The company undertakes no obligation to revise or update any forward-looking statements. Lastly, on this call, we will refer to adjusted financial results that are considered non-GAAP for SEC reporting purposes. A reconciliation to GAAP results is included in our earnings release as well as a slide presentation. With that being said, I'll turn the call to Nick.

Thank you, Dave, and good morning, everyone. Before we dive into our Q3 results, I will take a moment to provide a brief update on our strategic review process that we announced a few months ago. Recall that this process is aimed at identifying and executing alternatives to unlock the inherent value of our business portfolio. In our view, this value is not yet reflected in our market value. Throughout our process, and as expected, we have seen strong and definitive interest in our clean earth business from both strategic parties as well as others. While nothing can be certain, we believe that there is a path to crystallizing its value in a tax-efficient manner for our shareholders. We have spent considerable time with our advisors thinking through structures that work one of which involves a simultaneous sale of Clean Earth together with the taxable spin to our shareholders of our Harsco Environmental and rail businesses. We believe this structure would result in minimal tax leakage for our investors and would allow for a sizable cash payment to shareholders upon the sale of Clean Earth. In fact, we've recently amended our credit agreement to allow for this transaction. Tom will comment further on this amendment. We will update you further when appropriate, but we believe we should be in a position to conclude our process review prior to the end of this year. Now let me turn to our third quarter earnings, starting with Clean Earth, and Tom will cover our financial results in detail shortly. Clean Earth's revenue and earnings grew single digits, and its margins exceeded 17%. translating to a record quarterly performance for the business. The degree of execution delivered by the Clean Earth team remains very high despite various distractions as it focuses on its key priorities. Our investments and new capabilities continue, and CE's IT implementation is on track and nearing completion. Commercially, the team committed to a new growth strategy a year ago and we built a strong business backlog since. The CE is now seeing healthy volume growth as a result. We expect strong performance or more of the same from Clean Earth in Q4. Turning to Harsco Environmental, results improved in Q3 with HE's margin reaching 17% and the business generating 33 or 30 million in free cash flow in the quarter. Looking back, we believe this business troughed in the first half of 2025. New contracts are in place to replace those exited over the past year, and improvements in underperforming sites, while slower than we'd like, are ongoing with benefits expected in coming quarters. HEE has also experienced some cost inflation in recent quarters, and we've implemented cost-out actions to absorb this impact. These added costs should be offset in 2026 through these efforts and also through price increases. We're also hopeful that the steel industry volumes are set to improve. In early October, the European Commission proposed new and significant safeguard measures to protect its steel industry. These actions include higher import tariffs and lower quotas, among other changes. These measures are likely to lift volumes in a key market for HE if implemented next year. Overall, HE remains the industry leader, and we expect 2026 to be a better year for the business. Moving to Harsco Rail, our challenges in rail are clear, and I'm pleased with how our new management team, which is operationally focused and has considerable ETO experience within the broader rail industry, is taking aggressive and appropriate action to move the business forward. Shop floor bottlenecks have lessened and supply chain pressures are improved. Overhead costs are being addressed as well. Confident this management team can transform the business over the next year or two. On the commercial side, demand for standard equipment and aftermarket parts remains weak and at unprecedented levels. We're hopeful that this downturn will be short-lived, given that maintenance spending can only be deferred for so long, but we've yet to see signs of upcoming improvement. Importantly, Roehl's base business is profitable and cash generative, despite this market situation, and Harsco Roehl remains a technology and industry leader. Roehl is also making good progress with its ETO contracts, which continue to consume cash. Our discussions with Network Rail to amend or exit that contract are ongoing. Deliveries and development work on SBB and DB are on track, with few surprises in recent months. As we've discussed previously, Rail's cash flow profile is anticipated to turn positive in 2027 as our ETO contracts mature and we are paid for the machines that we deliver. As a result of the demand weakness in rail and other impacts in HE, we have lowered our outlook for the year. Looking further ahead, we are optimistic about 2026 and confident in the earnings and cash flow potential of our company. Evaluation of strategic alternatives is to address this disconnect, and we will update you further on this review when appropriate. I will now turn the call over to Tom.